In some circles, George Glasier, founder of Energy Fuels (TSX: EFR; NYSE: UUUU) and more recently Western Uranium (CSE: WUC; US-OTC: WSTRF), is thought of as an industry rockstar.
During his first year as president and CEO of the wildly successful Energy Fuels — a company Glasier set up in 2006 and is now the largest producer of uranium in the United States — the stock price surged 4500%.
And in the two years since he set up Western Uranium, Glasier has acquired seven past-producing mines, some from Energy Fuels, and all within a 330-km radius in Utah and Colorado. Collectively they contain about 100 million pounds of uranium and 36 million pounds of vanadium.
“George is the Bono of uranium,” says a former fund manager and long-time friend, likening Glasier’s stature to that of the Irish lead singer for rockband U2. “No one in the industry has his uranium experience. No one.”
The four years Glasier spent at Energy Fuels were heady ones, with the price of uranium marching steadily higher from around US$20 per lb. to about US$135 per lb., before crashing back down to earth.
“We were in an up-market and it was very exciting,” Glasier recalls in an interview. “We went out to raise US$10 million and we got US$50 million. We’d be giving presentations and in the first ten minutes they’d say: ‘Here, we want to sign up.’”
Glasier left Energy Fuels in 2010 to pursue other business interests, but returned to the industry in 2014 to set up Western Uranium. The junior’s flagship asset is the Sunday mine complex, in western San Miguel County, Colorado. The complex consists of five permitted mines and was most recently owned and operated in 2009 by Denison Mines (TSX: DML; NYSE: DNN).
“It’s in great shape. There’s nothing that needs to be refurbished,” Glasier says of the Sunday mine complex. “The contractor said they could be producing there in 30 days … so five of our seven mines could be put back into production within 30 days, the other two probably in 90 to 120 days.”
Building Western Uranium has been just as exhilarating as his early days at Energy Fuels, Glasier says, but he admits that acquiring uranium assets in a down-market has been a clear advantage.
“I was buying property at Energy Fuels for sky-high prices,” he says, “this (Western Uranium) is a case of building a big asset base with the expectation of prices going up, so it’s equally exciting but in a different way.”
“It took Energy Fuels ten years to get over 100 million pounds of uranium and we did it in two years,” he adds. “We’re working on some other acquisitions and right now companies can’t get any money so they’re interested in deals. We just raised $1 million in a bad market and at a bad time of year, so with a little bit of money, we can do a lot of stuff.”
What is perhaps most exciting for Glasier this time around, however, is a new patented technology that can be used on sandstone-hosted uranium-vanadium deposits called ablation, which Western Uranium has the exclusive licence to use for the next 25 years.
The technology, developed by scientists in Caspar, Wyoming, dramatically reduces transportation and milling costs because it eliminates between 80% and 90% of the waste rock through a process that uses kinetic energy rather than chemicals.
With ablation, particles in a slurry are forcefully driven against each other, which loosens and separates the uranium and vanadium coating from the sand.
The processing is quite simple. First, the sandstone rock is crushed into half the size of a typical fingernail. Then a slurry is formed, 20% of which is composed of the sand crushed from the rock, and 80% of which is water. The slurry is then ejected from pipes (imagine garden hoses with nozzles) that face each other, about ten centimetres apart, smashing the particles in a central collision zone.
Glasier estimates that by reducing the cost of transportation and milling and tailings, ablation technology could drive down the cost of producing a pound of uranium by as much as 40% to 50%.
Eliminating so much of the waste rock and leaving it at the mine site, for example, would send transportation costs down from around US$25 per tonne to about US$2.50 per tonne, while milling expenses could fall from around US$120 per tonne down to around US$25 per tonne. Altogether, Glasier says, Western Uranium would be able to process a tonne of rock containing 5 pounds of recovered uranium and 20 pounds of recovered vanadium for roughly US$133 per tonne, including mining costs.
The savings on transportation and milling costs also enable Western Uranium to mine lower grade material.
Glasier says the company has already received inquiries about the technology from other uranium companies in Africa, Australia and North America. So far, Western Uranium has tested ore from three companies in Africa, including GoviEx Uranium (CVE: GXU). “They’ve just announced we tested their ore but we haven’t done a deal,” Glaser says.
The mining executive notes that a lot of uranium companies with projects in Africa would need a uranium price of at least US$70 per lb. to be economic, and ablation technology would help them get into production at a lower uranium price.
Western Uranium is looking at a much lower threshold to get into production, given the cost-reducing ablation and its vanadium credits. Moreover, prices for vanadium — an important infrastructure metal used as a key alloy to strengthen steel — have been on a tear over the last six months, and are now sitting at around US$5 per lb.
“We’re still waiting for the uranium price to recover a bit before we put it into production,” Glasier says of the Sunday complex. “Assuming the ablation technology and with vanadium a key component at around US$5-6 per lb., you’re probably looking at US$35 per lb. uranium.”
“We have a number in the mid-US$20s per lb. uranium for all-in-sustaining costs so at US$30 per lb. uranium you’re making money, at US$40 per lb. uranium you’re making more, and at US$50 per lb. you’re making a lot.”
“We haven’t done a PEA on the Sunday mine, we’re just using numbers common in the area and standard production costs, and this is what comes out of it — the ablation technology reduces the mass we ship to the mill by that much!”
Christopher Ecclestone, an analyst at Hallgarten & Co., a boutique investment firm in the U.K., says that with vanadium as a second arrow in its quiver, the Western Uranium story becomes even more compelling.
“With the tailwind of soaring vanadium prices, combined with vanadium being a prime ‘infrastructure metal’ in Trumplandia and the prospect of ‘onshore’ vanadium production in the U.S. make the WUC story so much more than just a uranium prospect,” he wrote in a recent research note. (Vanadium may also begin to play a bigger role in battery manufacturing, too.)
In addition, Ecclestone points out that China, Russia and South Africa currently account for around 90% of the global supply of vanadium, and says “some estimates” suggest demand for vanadium “might grow at 7% per annum from 2010 to 2025, based on the steel applications alone.”
Romeo D’Angela, a Toronto-based former fund manager and now a shareholder in the company, first bought stock in the spring of 2016 and added to his position in December. “You can treat it as a uranium company with a significant vanadium credit, or vice versa, and the cherry on the top is the ablation process and from everything I’ve read about it, it’s a simple process.”
D’Angela also says he was impressed because the company has “multiple” catalysts. Not only does it have a significant number of proven pounds of both uranium and vanadium in the U.S., he says, but when he did the math and valued it relative to other uranium companies, he found that it is “the cheapest by far — by about half — of the better known names in the sector.”
Companies like UEC, Cameco, UR-energy, Energy Fuels, Berkeley, Dension, Blue Sky Uranium, Fission, MEGA Uranium, Nexgen, and Uranium Resources, for instance, are currently trading above US$1 per lb. insitu, while Western Uranium, which has the second-largest uranium package in the U.S., is currently trading at a multiple of about US25¢ per lb. insitu. Its market cap is just $30 million.
Other catalysts for the company could be licensing out the ablation technology to other uranium companies for a fee or royalty. The technology could also be used by the U.S. Department of Energy to clean-up old uranium waste dumps across the U.S.
And like Ecclestone, D’Angela believes that a Donald Trump presidency will likely heighten demand for both vanadium and uranium, while throttling back on regulation.
“I’m not necessarily a fan of everything he does … but what I like about it from a resource investor perspective is that he’s going to significantly tie the hands of the EPA (Environmental Protection Agency) to reduce unnecessary regulation, or over-regulation, so a lot of regulations in the nuclear-uranium business are going to be curtailed so the company can function easier and cheaper.”
Western Uranium already has significant milestones under its belt. It signed its first uranium off-take contract with a U.S. utility in November 2015, and is in discussions with other utilities for additional contracts.
It also has an agreement with Energy Fuels to use that company’s White Mesa mill on a toll-milling basis, while Glasier has successfully permitted a yet-to-be-built uranium mill called Pinon Ridge in Colorado —t he first uranium mill to be permitted in the U.S. in a quarter of a century. (Glasier owns the permit/project and has signed a letter of intent with Western Uranium to access the facility, once it is built.)
Says Glasier: “If we start to get a recovery in uranium, investors are going to see the opportunity.”
